• July 6, 2020

Effective Budgeting

Effective Budgeting

Effective Budgeting 1024 683 admin@5@r35s@g09@3

The current economy has left many of us feeling the proverbial pinched purse strings. Managing your finances is more than making sure you make it through the month, it’s there to help you plan ahead so that when the time comes, you have what you need at your disposal.

What better time to assess where one is in terms of spending habits, wins and losses with decisions centred around money, and being able to sit down and assess the debt we are in, how we got here and how to work towards paying it off.

Budgeting feels like a daunting task, but all it really means is that you’re forecasting a plan for your money to ensure that you’re spending with a purpose – although it might feel like it’s placing financial restrictions on you, it’s actually a process that is freeing up your finances so that you can enjoy that little bit of extra income when necessary, or plan for events like this.

It’s an ongoing process that should become a habit. Creating a tangible and reasonable plan for your money means that not only will you have an effective strategy when it comes to getting the things you want, but it will also keep you out of debt, or help you if you are currently working your way out of debt. It will also be able to help you pinpoint those months in which money may be a little tight and those months where you have a bit more financial freedom allowing you to even out those unpredictable highs and lows in your finances which can cause a whole lot of unnecessary, and unpleasant stress.

So how does one go about creating a budget that you can easily stick to? Here are 4 simple tips to help you get started.

  1. Start with the most important expenses – Make a list of the true necessities,
  2. The basic ones are shelter, food, clothing and transport. Once you have listed the absolute necessities then you can fill in the rest of the categories that suit your lifestyle.
  3. Be realistic about your wants and your needs – There is no point in doing a budget if you’re not going to be realistic in your forecasts. The more realistic you are about each of your numbers, the more likely it will be for you to stick to your budget.
  4. Review and re-calculate – Writing down all your expenses allows you to see where you can cut out on bad spending habits, saving you money. It may seem daunting, but you need to accept that there might be a few items that you just don’t need (and maybe can’t afford) right now.
  5. Remember, your budget cuts don’t have to be permanent. You can always make adjustments later on down the road.
  6. Include an extra category in your budget – Even putting aside a minimal amount every month towards those unforeseen expenses can make a difference. Start small and try increase this contingency amount each month. This money can be used in case of an emergency, such as a car repair or medical expense.

Now that you have an idea on how to get started there are some things to keep in mind. Remember that each month is different and factor in special occasions such as birthdays or holidays – these can affect your budget, so lay them out in your forecast as soon as you begin. Don’t forget your debt. Ideally, you’d want to start with the one with the highest interest rate, paying as much as you can every month. If you have other accounts, pay the minimum balances on those until you’ve paid off the first card, then choose the next card and pay extra for it while you pay minimums on the others.

The most important thing is to remember that life happens –It’s almost impossible to follow a budget 100% of the time, especially if it is your first time. No matter how disciplined you are, you may overspend time and again, so forgive yourself for small errors and get back on track, as soon as possible. Use your budget as a guide to make better financial decisions going forward.

We understand what a difficult juggling act it can sometimes be to manage your finances, so if you find the task daunting, why not contact us and we can guide you along the path to financial stability. It’s what we do, we are the experts and we want you to make the most of every hard-earned cent.

If you would like to discuss this further, feel free to get in touch with us.

☎️ +27 21 933 4170

📧 info@randsure.com